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    Published on: September 22, 2016

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

    It seems to me that more than ever, especially as competition gets more intense, retailers have to assert themselves in the customer experience. That experience, it seems to me, has to be more specific and more differentiated than ever. And retailers don't only have to take responsibility for it, but they have to embrace the moments as opportunities.

    This came to mind for me recently when I read two stories that seemed to run contrary to my feelings about this ...

    First, a New York Times story saying that there are some hotels out there that seemed to be taking a page from the airlines' book, deciding that if they can get a fee for something, they're going to do their best to get a fee for something.

    According to the story, "New research from the Jonathan M. Tisch Center for Hospitality and Tourism at New York University indicates that hotels in the United States will tack on $2.55 billion in fees this year" — the highest amount since the center began tracking them 16 years ago.

    An example - free in-room coffee. When I'm traveling, I really like the idea of being able to make myself a cup of coffee when I get up early in the morning to do MNB, or to keep myself when I'm working late at night. But now, some hotels apparently have decided that they rig up in-room coffee machines so that the customer gets charged a couple of extra bucks for each cup of coffee.

    Now, this strikes me as petty ... and my inclination would be to avoid any hotel chain that institutes such a policy. This is where I apply the Jurassic Park rule - just because you can do something doesn't mean you should do something. A cup of coffee can't cost that much, guests have gotten used to getting it for nothing, and all such a fee does is irritate the customer.

    I was recently staying at the Acme Hotel in Chicago, where they didn't have an in-room coffee pot ... but they delivered a thermos full of hot coffee to the room in the morning, which was great. And no charge. Now, that's what I call taking responsibility for creating a better customer experience. I'd go back there in a second.

    There was another Times story the other day about an airline that has, you'll excuse the pun, missed the boat.

    The story was about how American Airlines has a new advertising campaign in which it says that it "would really, really appreciate it if you could ask before raising the window shade, and if you could not hog the armrest. Also, be nice to the flight attendants when they greet you." Basically, the campaign takes the position that we, as fliers, are responsible for the quality of our flying experience, and it would work out better for everyone if we'd take our responsibilities seriously.

    Give me a break.

    I fly a lot. More than two million miles over the course of my career. (Not exactly George Clooney / Up In The Air territory, but not bad.) And when I travel, I try to be friendly to the flight attendants, courteous to my fellow passengers, only store my stuff in the luggage bin above my seat, never bring too many carry-ons, and generally behave like a responsible, civil human being.

    Now, if I were not such a person, I suspect that no amount of advertising would make me change my behavior. And all the ads make me think is that American Airlines, being generally unsuccessful at creating a positive flight experience, has decided to make passengers responsible.

    I'm sorry, but I think based on the fact that I'm actually paying for my ticket, paying all sorts of exorbitant fees, and putting up with the inconveniences that often accompany flying these days, maybe American Airlines ought to treat me like a guest, not an interloper who is more likely than not going to inconvenience them.

    This goes for every customer-facing experience. You take responsibility for it, you embrace it as an opportunity, and you say to yourself, how can I prove to customers than I'm loyal to them?

    That's what's on my mind on this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: September 22, 2016

    by Kevin Coupe

    The Washington Post had a story that seems to confirm something that a lot of people already knew, or at least suspected - that one in five CEOs is a psychopath.

    The piece notes that "Webster’s Dictionary defines the condition as 'a person who is mentally ill, who does not care about other people, and who is usually dangerous or violent and affected with antisocial personality disorder'." And, that a study for the Telegraph looking at 261 senior executives in the US suggests that 20 percent of them exhibit behavior consistent with psychopathic behavior - that corporate success "is a game and they don’t mind if they violate morals. It is about getting where they want in the company and having dominance over others.”

    Now, I thought that this all seemed a little hyperbolic. I've had some pretty awful bosses in my life, but were they psychopaths? (Sociopaths, maybe...) And one of out five just seems a little high.

    But the story goes on to make some interesting points:

    "By the way – psychopathic behavior in the general population is about one in a 100. What’s a little disturbing in this study is that not only are 21 percent of corporate executives psychopathic, but so is the same percentage of prison inmates.

    "Also disturbing: this isn’t the first time researchers have noted psychopathic tendencies among senior executives. In research also reported by The Telegraph a few years ago, a psychologist warned of a growing number of 'triadic persons' in the workplace who combine three types of dysfunctional personalities among white-collar workers: psychopath, Machiavellian, and narcissist. Such people, he warned 'have a dangerous, yet effective mix of a lack of empathy, self-centeredness, deviousness and self-regard which can propel them to the top of the organizations'."

    No names are mentioned in the piece, but it is likely that the study was conducted in part because CEO temperament is in the news a lot these days. And the Post probably figured that the study would be an Eye-Opener.

    if nothing else, maybe it will have some people looking at their company's org chart, and start wondering...
    KC's View:

    Published on: September 22, 2016

    USA Today reports this morning that an investigation by the nonprofit news organization ProPublica says that "the 48% of Amazon customers who don't subscribe to its Prime service may not always be shown the lowest price for products unless they do careful research on the site."

    According to the story, "Amazon's price comparison tool works for Prime members, most of whom who pay $99 a year for free shipping and a host of other perks, and for people ordering over $49 worth of products who get free shipping. But for the rest of Amazon's customers, Amazon's price comparison ranking doesn't necessarily result in the lowest prices coming up first, making it necessary to laboriously drill down into the search results to get the best deals, ProPublica found."

    USA Today goes on: "ProPublica analyzed 250 commonly bought products over several weeks, watching to see which were placed in the 'buy box,' the highlighted, clickable box that appears at the top of an Amazon product search page. The study found that about 75% of the time, Amazon products or those sold by companies that paid Amazon to store and fulfill their orders were in that top slot, even if cheaper options were available from other sellers.
    For non-Prime customers with orders under $49, finding the best prices was possible but involved clicking through on multiple options to do true cost comparison."

    Amazon responded to the criticism by saying that "its sorting algorithms are designed for items where shipping costs do not apply. The company said that about 90% of items ordered on its site don't have shipping costs because they're either ordered by Prime members or by people using Super Saver Shipping, which requires no membership and ships orders above $49 for free."
    KC's View:
    As long as Amazon is not deceiving anyone, I think the company will be perfectly happy if customers realize that Prime members get the best prices and the best service. In fact, Amazon might be willing to argue that this is one of its differential advantages in the marketplace - that it, maybe more than any other retailer, is able to be relevant to its shoppers - and more relevant to its best shoppers - because of the data it accumulates and actually uses.

    Sine Amazon knows than non-Prime customers spend an average of $500 a year, and Prime customers spend an average of $1200 a year, it makes good business sense to do more for its best shoppers and try to convert as many to the Prime category as possible.

    Published on: September 22, 2016

    The Associated Press reports that Attorneys General from 21 states are suing the US Department of Labor, challenging a new rule that changed the criteria for overtime pay, saying that by making as many as four million higher earning workers eligible, the federal government "would burden private and public sectors by straining budgets and forcing layoffs or cuts in working hours."

    The AP story notes that "the lawsuit came the same day that the US Chamber of Commerce and more than 50 other business groups filed a legal challenge against the regulation.

    The new rule was set in May, and would slated to go into effect at the end of the year. It would have allowed full-time salaried employees to earn overtime if they make up to $47,476 a year, more than double the previous level of $23,660 a year.
    KC's View:
    I have mixed emotions about this one. Twenty three grand isn't all that much money ... if a person is trying to support a family of four on that kind of money, they're actually below the poverty line. And so I think it probably makes sense to change the criteria.

    But we're also living in an economy where labor is tight, and so one would imagine that market forces would handle this to some extent ... and that there ought to be different rules in different parts of the country.

    Like I say, I'm conflicted.

    Published on: September 22, 2016

    The Seattle Times reports that CVS "is launching curbside pickup at 4,000 of its pharmacy stores nationwide," allowing its customers "to purchase non-prescription items online or through their mobile devices, then have them delivered to their car within an hour."

    The initiative is said to be "a partnership between CVS and the Palo Alto, Calif.-based makers of the Curbside app." The service will not be available at CVS stores located within Target locations.
    KC's View:
    Click-and-collect is going to be like scanning ... an absolute requirement for most retailers to offer. This is just the beginning, and retailers that do not offer this sort of option are going to be seen as irrelevant.

    Published on: September 22, 2016

    The New York Times this morning has a story about the extent to which Chipotle is working to improve its food safety processes and bolster its public image, highlighting new procedures such as requiring all store employees to wash their hands every 30 minutes.

    "There isn’t much sexy about food safety, and that goes for regular reminders to scrub hands," the Times writes. "But for the last year, Chipotle has been forced to focus on little else, after a string of illnesses among diners at the Mexican restaurant chain grew into nationwide alarm. The concern has battered the company’s sales, reputation and stock price."

    The company is focusing on a number of new initiatives, "including work it is doing to enhance food safety among its suppliers, hoping that pointing to the moves will help regain the public’s confidence — and profits." Coordinating all these efforts is Dr. James Marsden, Chipotle's new executive director of food safety (and, as it happens, the father of the James Marsden who was in the X-Men film series and has a leading role in the new "Westworld" series on HBO), described as "a longtime academic whom Chipotle hired in the spring. In one of his first extended interviews since arriving at the company, he said his challenge had been clear: to allow Chipotle to continue using fresh ingredients - not frozen or precooked - while making its farm suppliers, food and restaurants safer."

    It is an interesting story, and you can read it in its entirety here.
    KC's View:

    Published on: September 22, 2016

    The Washington Post this morning reports that a new study published in the journal Applied and Environmental Microbiology says that the mythical five-second rule - "if you drop food to the ground, you have a five-second window to pick it up and the snack will remain clean enough to eat" - is, in fact, a myth.

    "Like most ideas concocted in cafeterias where the French toast sticks are haute cuisine, this rule does not hold up under intelligent, or basically any, scrutiny," the story says, adding, "The five-second rule is the fulcrum on which we balance our aversion to spoiled grub with our desire to scarf down the tasty stuff, microbes be damned. (This is the point where we should mention there are 31 known pathogens responsible for an estimated 9 million cases of food-borne illness a year, according to the Centers for the Disease Control and Prevention.)"

    Donald Schaffner, a Rutgers University biologist and an author of the research, argues it this way: "“The five-second rule is a significant oversimplification of what actually happens when bacteria transfer from a surface to food ... Bacteria can contaminate instantaneously.”
    KC's View:

    (I thought it was a 15-second rule...)

    Published on: September 22, 2016

    • Walmart is rolling out its grocery click-and-collect service in Minneapolis/St. Paul, which the Star Tribune points out is right in rival Target's hometown backyard.

    The story notes that "Wal-Mart first began testing online grocery pickup in a handful of markets a few years ago. This year, it has been rapidly expanding the service, which is now in more than 60 markets. The retailer is also testing grocery home delivery in a couple of markets, and delivery through services like Uber, Lyft and Deliv.

    "Like most other major retailers, Wal-Mart is trying to keep up with Amazon and a host of other third-party services that have flooded the market with speedy delivery."

    Reuters reports that US District Judge Susan Hickey in Fayetteville, Arkansas, has ruled that Walmart "must face a class-action lawsuit accusing the world's largest retailer of defrauding shareholders by concealing suspected bribery to help it expand faster in Mexico ... The decision means shareholders can sue Wal-Mart and former Chief Executive Mike Duke as a group over the alleged cover-up of bribery at Wal-Mart de Mexico. This could lead to a larger payout at lower cost than if individual lawsuits were required."

    Walmart has argued that "a Michigan pension fund had no standing to lead the case because it had not suffered losses on the retailer's stock." But the judge wasn't buying.
    KC's View:

    Published on: September 22, 2016

    • The Boston Globe reports that Amazon appears to be hiring for a new Amazon Books store that will open at the Legacy Place mall in Dedham, Massachusetts. This new location, the story says, "would join three Amazon Books outlets: one in its hometown of Seattle, another in San Diego, and a third planned for Portland, Ore. Media reports have also indicated that Amazon may open bookstores in Chicago and New York."

    The stores not only sell best-sellers as determined by online shoppers, along with user reviews, but also various tech products - Kindles, Fire TVs, Echo voice-activated computers, for example - that are positioned to help it sell other products.
    KC's View:

    Published on: September 22, 2016

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Puget Sound Business Journal reports that Portland, Oregon-based New Seasons Market has set an opening date - November 10 - for its first Seattle-area store, which will be located on Mercer Island, in an old Albertsons location.

    The store is said to be "the first of possibly three new stores around Seattle" that NewSeasons would like to open.

    According to the Journal, "This new store will be the latest expansion of several by natural food markets, such as Seattle-based PCC Natural Markets and Metropolitan Market as well as Whole Foods, that are expanding in or entering the Puget Sound-area market. Add that to the increase of traditional grocers, from Costco, to Safeway to Wal-Mart, expanding their natural and organic food selections, and natural food stores in the area have a lot of competition."

    I'm looking forward to seeing how New Seasons performs in the Seattle area, and not just because it is one of my favorite food retailers. Both New Seasons and Metropolitan Market are in the Endeavour Capital portfolio ... but they have different offerings, and I'll be interested to see how they compete and co-exist in Seattle.

    • The Japan Times reports that "Seven-Eleven Japan Co. expects to open thousands of new stores in the U.S., increasing its current tally of 8,500 to 20,000, President Kazuki Furuya said ... The U.S. unit is now prepared to expand its network after introducing Japanese-style product development and services through personnel exchanges with Seven-Eleven Japan, Furuya said.

    "He said whereas U.S. customers tended in the past to be lower-income people, increasing numbers of the middle-class are now using the outlets because the quality of goods has improved."
    KC's View:

    Published on: September 22, 2016

    • The Wall Street Journal reports that David Hoffman, who has been running McDonald's high growth markets division (that includes China, Russia and South Korea) and is a two-decade veteran of the fast feeder, has been named president of Dunkin' Donuts US.

    The story notes that "McDonald’s on Wednesday disclosed in a regulatory filing that Mr. Hoffmann, 48 years old, had resigned Friday and that he hadn’t signed a noncompete agreement, thus forfeiting certain benefits such as unvested cash and equity incentive awards." In his new job, Hoffman will be "responsible for Dunkin’ Donuts operations and marketing in the US and Canada, as well as global franchising and store development for both Dunkin’ Donuts and Baskin-Robbins."
    KC's View:

    Published on: September 22, 2016

    Got the following email from MNB reader Ken Wager, responding to last week's FaceTime about the mismatch between available jobs in the US and the skill levels of those who are looking for work:

    I've been around for a long time and I find nothing evil in companies using technology to limit human employees. It only makes business economic sense. On the other hand I also don't think it is realistic to think that very many coal miners can be retrained as IT workers. My son has an IT degree and has to work and study very hard just to keep up with the rapid changes in that field and is under constant threat of his job being outsourced to India or elsewhere due to equal abilities at lower wages.

    What is economically good for my business or industry today may or may not be economically good for my industry or the world in the future. Ford's production line changed world industry in a positive way for decades but Enron's behavior, not so much.

    My point is simply that the threat of a growing population with fewer overall good paying jobs is a real threat that is not in my opinion being considered much less addressed and which has no easy answers. We are unlikely to solve theses problems in our lifetimes but that makes them no less real. It seems to me we should acknowledge the problem even if we have no idea how to fix it.

    Just one old retired guy's opinion.

    We all so love easy answers to complex problems but those easy answers rarely work long term.

    Keep up your good work and keep challenging people to think!

    When I made the "train coal miners to be computer programmers" suggestion, I recognized that I was drawing in stark, back-and-white terms ... I know that it'll never be that easy.

    I guess my larger point is that one has to grapple with the economy/culture one has and will have, not the economy that we used to have or wish we had. Nostalgia is nice, but largely is illusory.

    On another subject, MNB reader Lisa Malmarowski wrote:

    Hooray - meal kits cut down on food waste.

    This is greenwashing at it’s finest, designed to make the end user not feel bad about the extra fossil fuel it costs to ship it not to mention the excessive packaging. And of course it was underwritten by a, wait for it, meal kit shipper.

    I’m surprised you didn’t call them on this glaringly obvious fact.

    To be honest, I didn't think of it. So I'm glad you did.

    Though, to be fair, I did point out who funded the study.

    Yesterday, MNB took note of a Bellingham Herald report that "a group of creditors still owed money from the Haggen bankruptcy is going after the grocer’s previous owner in court. The lawsuit filed in a Delaware Bankruptcy Court on Wednesday, Sept. 7, alleges that Comvest Group Holdings covertly siphoned away valuable real estate assets that Haggen acquired from Albertsons to benefit Comvest and not be used to pay back creditors."

    I commented:

    I don't know the ins and outs of the deal, but it would not be hard to persuade me that when Comvest did the original deal, acquiring 146 stores from Albertsons that I thought from the beginning it would have no shot at operating successfully, it had to have a way to make money even if the chain collapsed. So, did these guys screw over creditors? Seems plausible to me. Did they protect themselves so that suits such as this one won't be successful? Wouldn't surprise me at all.

    MNB user Joe Ciccarelli responded:

    Kevin, the answer to your two questions is yes and yes. I know several of the creditors (CPG manufacturers) and when you examine all the facts and connect all the dots as they have it was a “dirty deal” designed from the start to line their pockets at the expense of others – including a lot of former employees.
    KC's View: